In 2014, Scott from I Dream of Fire checked his old Roth IRA account. He had been investing $100 a month for two years and thought, with the strong stock market, the account would be growing.
“Around 2010, my financial advisor retired and sold her business to a couple of guys,” says Scott. “I’m in Utah; they’re in Michigan. Needless to say, I wasn’t dropping by for a cup of coffee and a chat.” In other words, Scott didn’t give his retirement money much attention.
“When I finally looked at my account I saw my $2,400 was sitting in a money market account,” says Scott. A money market account earns very little interest. “I was shocked thinking ‘I just lost two years of the biggest bull market because I wasn’t paying attention?’ That’s when I got angry.”
That jolt hit him hard and he learned some valuable lessons. Scott says, “I would never again passively throw my dollars into the money-making market machine and trust that my guy had it all figured out for me.” In the four years since that shocking moment, Scott says he’s learned some hard truths. They include:
- Investing can be as easy or as complicated as you want to make it.
- You can learn almost everything you need to know in less time than it takes to research a good fantasy sports lineup.
- No one — no one — will look out for your money in your best interest more than you.
Now he says, “Honestly, I’m glad that happened. If that $2,400 had been in funds that made $200 or $300 I would have smiled and thought everything was just lucky.”
Changing His Lifestyle
From that moment on, Scott vowed that he’d never let anyone else control his money or spending habits. He adopted a more frugal life and a different philosophy about money. Through research he found the Financial Independence/Retire Early (FIRE) community.
“Being part of the personal finance community exposed me to the concept of living intentionally and giving yourself options to live the life you want instead of the life you’ve spent your way into,” says Scott.
Now he looks for things he calls “quick wins.” He ignores the newest tech gadget and goes with a mid-range phone instead. He keeps the house warmer in the summer and cooler in the winter. And he selects a $24-a-month phone plan and receives a quote from his car insurer annually to see if competitors can beat it.
He understands that his lifestyle isn’t for everyone. In an interview he did for CNN Money, Scott says, “Not everyone should do this. We have made specific decisions aligned with our values on a daily or monthly basis that will be different than other people.”
His money management regimen is also rigorous. “I transfer money between my checking account and savings accounts that I set up for expenses,” says Scott. “I have a bucket for each one, whether it is tuition, vacation, car insurance, Christmas, emergency fund or whatever it may be.” He also invested heavily in something he calls an “opportunity fund.”
After working hard for many years and managing his own money, Scott decided that he’d take a year off starting on his 38th birthday in April. The time seemed right because his older son only has one more semester in college and his youngest son earned scholarships, which are paying for his college.
He says he’s been struggling with his current IT administration job. “I just don’t feel connected to the work or the results,” says Scott. “I feel stagnant, uninspired, and unchallenged. On top of that, my daily commute clocks in a little under three hours.”
Scott says that he’s not financially independent yet, but he and his wife are working toward that goal. He also says, “I could never pull this off if we inflated our lifestyle over the years to match our incomes.” So, what will Scott do with his time after being employed for nearly 22 years?
“I’ll work on being present instead of thinking about the next thing on my calendar,” says Scott. “Mostly, I’ll be intentional and strive to live into each day rather than live through it.” Congratulations.
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